Jacobs v. Adelson

130 Nev., Advance Opinion 414
IN THE SUPREME COURT OF THE STATE OF NEVADA
STEVEN C. JACOBS, No. 58740
Appellant,
vs.
SHELDON G. ADELSON, IN HIS
FILED
INDIVIDUAL AND REPRESENTATIVE MAY 3 0 2014
CAPACITIES, LI NDEMAN
REM E
Respondent.
Appeal from a district court order, certified as final under
NRCP 54(b), dismissing respondent from a defamation action. Eighth
Judicial District Court, Clark County; Elizabeth Goff Gonzalez, Judge.
Reversed and remanded.
Pisanelli Bice, PLLC, and Todd L. Bice, Debra L. Spinelli, and Jarrod L.
Rickard, Las Vegas,
for Appellant.
Morris Law Group and Steve L. Morris and Ryan M. Lower, Las Vegas,
for Respondent.
BEFORE THE COURT EN BANC.'
OPINION
By the Court, HARDESTY, J.:
Appellant sued respondent's companies for wrongful
termination, making a number of allegations in the complaint against
'The Honorable Kristina Pickering, Justice, did not participate in
the decision of this matter.
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respondent personally. After respondent published a response to the
allegations in the media, appellant sued him for defamation. The district
court dismissed the defamation claim, concluding that respondent was
protected from a defamation suit because his statements to the media
were made in the context of a judicial action. Although statements made
during the course of judicial proceedings are generally considered
absolutely privileged and cannot form the basis of a defamation claim, we
have yet to consider whether statements made to the media regarding
ongoing or contemplated litigation are covered by this absolute privilege.
We adopt the majority view that communications made to the media in an
extrajudicial setting are not absolutely privileged, at least when the media
holds no more significant interest in the litigation than the general public.
Thus, we reverse the order of dismissal and remand this matter to the
district court for further proceedings.
FACTS
Appellant Steven C. Jacobs filed a wrongful termination
complaint against Las Vegas Sands Corporation (LVSC) and Sands China,
Ltd. (Sands China). LVSC is the controlling shareholder of Sands China.
Sheldon G. Adelson is the chief executive officer and majority shareholder
of LVSC and Jacobs' former employer. Although Adelson was not
originally named as a defendant, Jacobs' complaint alleged that Adelson
demanded Jacobs to engage in "illegal" activities while working for LVSC
operations in Macau. Jacobs further alleged that his refusal to carry out
those "illegal" demands resulted in threats by Adelson and Jacobs'
eventual termination. The complaint also contained numerous attacks
against Adelson personally, asserting that he made "outrageous demands"
and referring to him as "notoriously bellicose" and "mercurial." It also
attacked Adelson's behavior as "rude and obstreperous."
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LVSC and Sands China filed a motion to dismiss the
complaint, which resulted in a hearing that received widespread media
attention. After the hearing, the Wall Street Journal published an online
article about the case. According to the article, Adelson provided an e-
mail response that allegedly said:
While I have largely stayed silent on the matter to
this point, the recycling of his allegations must be
addressed. . . . We have a substantial list of
reasons why Steve Jacobs was fired for cause and
interestingly he has not refuted a single one of
them. Instead, he has attempted to explain his
termination by using outright lies and fabrications
which seem to have their origins in delusion.
Jacobs subsequently amended his complaint, adding a claim for
defamation per se against Adelson, LVSC, and Sands China. The
amended complaint alleged that the statements published in the Wall
Street Journal were false and defamatory, unprivileged, published
maliciously and known to be false or in reckless disregard of the truth, and
necessarily injurious to Jacobs' professional reputation.
Adelson, LVSC, and Sands China all filed motions to dismiss
Jacobs' defamation claim, arguing that the statements were absolutely
privileged communications made in the course of judicial proceedings or,
in the alternative, were protected by the conditional privilege of reply.
Alter a hearing on the motion to dismiss, the district court determined
that Adelson's response to the Wall Street Journal was an absolutely
privileged communication relating to the litigation. Based on its ruling
that Adelson's statements were absolutely privileged, the district court
declined to consider Adelson's alternative argument that his statements
were covered by the conditional privilege of reply. The district court thus
granted the motion to dismiss and, because the dismissal resolved all
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claims against Adelson, certified its order as final under NRCP 54(b) for
purposes of this appeal.
DISCUSSION
Standard of review
We rigorously review a district court order granting an NRCP
12(b)(5) motion to dismiss, accepting all of the plaintiffs factual
allegations as true and drawing every reasonable inference in the
plaintiffs favor to determine whether the allegations are sufficient to state
a claim for relief. State ex rd. Johnson v. Reliant Energy, Inc., 128 Nev.
„ 289 P.3d 1186, 1189 (2012). A complaint should be dismissed for
failure to state a claim only "when it appears beyond a doubt that the
plaintiff could prove no set of facts that would entitle him or her to relief"
Id. We review de novo the district court's legal conclusions. Buzz Stew,
L.L.C. v. City of N. Las Vegas, 124 Nev. 224, 228, 181 P.3d 670, 672 (2008).
We also review de novo the applicability of an absolute privilege.
Cucinotta v. Deloitte & Touche, L.L.P., 129 Nev. „ 302 P.3d 1099,
1101 (2013). Whether a statement is sufficiently relevant to the judicial
proceedings to fall within the absolute privilege is a question of law for the
court. Circus Circus Hotels, Inc. v. Witherspoon, 99 Nev. 56, 62, 657 P.2d
101, 105 (1983).
The absolute privilege
Nevada has long recognized the existence of an absolute
privilege for defamatory statements made during the course of judicial and
quasi-judicial proceedings. See, e.g., Clark Cnty. Sch. Dist. v. Virtual
Educ. Software, Inc. (VESA 125 Nev. 374, 382, 213 P.3d 496, 502 (2009);
Fink v. Oshins, 118 Nev. 428, 432-33, 49 P.3d 640, 643-44 (2002); Circus
Circus Hotels, 99 Nev. at 60, 657 P.2d at 104. This privilege, which acts as
a complete bar to defamation claims based on privileged statements,
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recognizes that "[c]ertain communications, although defamatory, should
not serve as a basis for liability in a defamation action and are entitled to
an absolute privilege because the public interest in having people speak
freely outweighs the risk that individuals will occasionally abuse the
privilege by making false and malicious statements." Cucinotta, 129 Nev.
at , 302 P.3d at 1101 (quoting Circus Circus Hotels, 99 Nev. at 61, 657
P.2d at 104); see also Hampe v. Foote, 118 Nev. 405, 409, 47 P.3d 438, 440
(2002), overruled on other grounds by Buzz Stew, L.L.C., 124 Nev. at 228
n.6, 181 P.3d at 672 n.6. An absolute privilege constitutes "an immunity,
which protects against even the threat that a court or jury will inquire
into a communication." Hampe, 118 Nev. at 409, 47 P.3d at 440.
In order for the absolute privilege to apply to defamatory
statements made in the context of a judicial or quasi-judicial proceeding,
"(1) a judicial proceeding must be contemplated in good faith and under
serious consideration, and (2) the communication must be related to the
litigation." VESI, 125 Nev. at 383, 213 P.3d at 503. Therefore, the
privilege applies to communications made by either an attorney or a
nonattorney that are related to ongoing litigation or future litigation
contemplated in good faith. Id. When the communications are made in
this type of litigation setting and are in some way pertinent to the subject
of the controversy, the absolute privilege protects them even when the
motives behind them are malicious and they are made with knowledge of
the communications' falsity. Id. at 382, 213 P.3d at 502; Circus Circus
Hotels, 99 Nev. at 60, 657 P.2d at 104. But we have also recognized that
'Uhl attorney's statements to someone who is not directly involved with
the actual or anticipated judicial proceeding will be covered by the
absolute privilege only if the recipient of the communication is
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'significantly interested' in the proceeding." Fink, 118 Nev. at 436, 49 P.3d
at 645-46 (quoting Andrews v. Elliot, 426 S.E.2d 430, 433 (N.C. Ct. App.
1993)).
Here, even though Adelson's statements mentioned ongoing
litigation, Jacobs argues that the district court improperly applied the
absolute privilege because the statements were made outside of the
judicial proceedings to disinterested persons, including the media and the
press, and are thus unrelated to the litigation. Jacobs avers that the press
lacks any legal interest in the outcome of this case and has no functional
ties to his claims or Adelson's defenses. Adelson, in contrast, contends
that the district court properly dismissed Jacobs' defamation claim
because his statements are absolutely privileged since they were made
during the course of this judicial proceeding and were directly related to
the subject of this lawsuit—Jacobs' claim for wrongful termination.
Adelson also argues that statements made to the media should be included
in the scope of Nevada's absolute privilege rule. Because we decline
Adelson's invitation to treat the media as "significantly interested" in the
litigation, we agree with Jacobs' assessment that absolute privilege does
not apply here.
Application of the absolute privilege in the media context
This court has not previously addressed whether the absolute
privilege applies when the media is the recipient of the statement. We
have, however, recognized that communications are not sufficiently
related to judicial proceedings when they are made to someone without an
interest in the outcome. See Fink, 118 Nev. at 436, 49 P.3d at 645-46.
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The majority of states have determined that the absolute
privilege does not apply when the communications are made to the media. 2
"Communications made to newspapers and during press conferences have
been almost universally found to be excluded from the protection of
absolute privilege." Med. Informatics Eng'g, Inc. v. Orthopaedics Ne.,
P.C., 458 F. Supp. 2d 716, 724 (N.D. Ind. 2006) (quoting Williams v.
Kenney, 877 A.2d 277, 288 (N.J. Super Ct. App. Div. 2005)); see, e.g., Asay
v. Hallmark Cards, Inc., 594 F.2d 692, 697 (8th Cir. 1979) ("Publication to
the news media is not ordinarily sufficiently related to a judicial
proceeding to constitute a privileged occasion."); Green Acres Trust v.
London, 688 P.2d 617, 622 (Ariz. 1984) (same); Rothman v. Jackson, 57
Cal. Rptr. 2d 284, 294-95 (Ct. App. 1996) (stating that the absolute
privilege generally should not be extended to "litigating in the press"); see
also Milford Power Ltd. P'ship v. New England Power Co., 918 F. Supp.
471, 486 (D. Mass. 1996); Seidl v. Greentree Mortg. Co., 30 F. Supp. 2d
1292 1313-14 (D. Colo. 1998); Kelley v. Bonney, 606 A.2d 693, 707 (Conn.
2A few jurisdictions have held that, under certain circumstances, an
attorney's statements to the media are absolutely privileged. See, e.g.,
Prokop v. Cannon, 583 N.W.2d 51, 58 (Neb. Ct. App. 1998) (extending the
privilege to statements made by an attorney to a reporter after the
dismissal of the first lawsuit). Other jurisdictions have found exceptions
to the majority rule based on unique circumstances. See, e.g., Johnston v.
Cartwright, 355 F.2d 32, 37 (8th Cir. 1966) (applying absolute privilege to
a statement to a newspaper when all signs pointed to emerging litigation
and the newspaper was a potential party); Jones v. Clinton, 974 F. Supp.
712, 731-32 (E.D. Ark. 1997) (applying absolute privilege to a lawyer's
statements to the press denying allegations and questioning the plaintiffs
motives, where the plaintiff publicly solicited a response); Helena Chem.
Co. v. Uribe, 281 P.3d 237, 239-40 (N.M. 2012) (holding that an attorney's
prelitigation statements to the press are absolutely privileged if a class
action lawsuit is contemplated).
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1992); Kennedy v. Zimmermann, 601 N.W.2d 61, 64-65 (Iowa 1999);
Kennedy v. Cannon, 182 A.2d 54, 58 (Md. 1962).
These courts have concluded that the policy considerations
underlying the absolute privilege rule are not applicable to statements
made to the media. Statements made to the media "do little, if anything,
to promote the truth finding process in a judicial proceeding. . . . [They] do
not generally encourage open and honest discussion between the parties
and their counsel in order to resolve disputes; indeed, such statements
often do just the opposite." Pratt v. Nelson, 164 P.3d 366, 381 (Utah 2007).
And allowing defamation claims for statements made to the media will not
generally hinder investigations or the detailing of claims. Milford Power,
918 F. Supp. at 486; see also Asay, 594 F.2d at 698. Thus, the need for
absolute privilege evaporates. Milford Power, 918 F. Supp. at 486.
Because the privilege's purpose is not to protect those making defamatory
comments but "to lessen the chilling effect on those who seek to utilize the
judicial process to seek relief," these courts have declined to extend the
privilege in this context. Kirschstein v. Haynes, 788 P.2d 941, 952-53
(Okla. 1990).
Based on the policy considerations underlying the absolute
privilege, we adopt the majority view that statements made to the media
are not subject to absolute privilege. Extension of the absolute privilege to
cover statements to the media, when the media are not a party to the
lawsuit or inextricably intertwined with the lawsuit, would not further the
policy underlying the absolute privilege. This position is also in line with
our previous caselaw acknowledging that the privilege was created in part
because the public interest in free speech during litigation outweighs the
possibility of abuse of the privilege through the making of false and
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malicious statements. See Cucinotta, 129 Nev. at , 302 P.3d at 1101;
Circus Circus Hotels, 99 Nev. at 61, 657 P.2d at 104. However, protecting
speech made during a judicial proceeding does not warrant allowing the
dissemination of defamatory communications outside of the judicial
proceedings. See Kelley, 606 A.2d at 707; Asay, 594 F.2d at 697.
Here, there has been no cogent argument that the Wall Street
Journal has any other interest than that of an observer in the litigation
such that the communications were made outside the judicial proceedings.
While Adelson's statements were connected to the litigation in that they
addressed Jacobs' contentions, we "draw the line between bona fide
litigation activities and a public relations campaign" as it concerns the
absolute privilege. Williams v. Kenney, 877 A.2d 277, 290-91 (N.J. Super.
Ct. App. Div. 2005). The dissent argues that the extensive media coverage
of the underlying judicial proceedings in this case has resulted in both the
media and the public becoming "significantly interested" in the
proceedings, thus triggering the absolute privilegeS to Adelson's contested
statements. We cannot agree.
As the dissent points out, we have previously determined that
the absolute privilege only covers statements made to those without direct
involvement in the judicial proceeding if the recipients of the
communication are "significantly interested in the proceeding." Fink v.
Oshins, 118 Nev. 428, 436, 49 P.3d 640, 645-46 (2002) (internal quotations
omitted). 3 While we have yet to examine what constitutes a "significant
3 0ther jurisdictions do not have this requirement. See, e.g., Helena
Chem., 281 P.3d at 242 ("[P]ublishing a statement to a person with a
direct interest in the judicial proceeding is not an independent element in
the absolute privilege analysis." (internal quotation omitted)).
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interest" in judicial proceedings, drawing from our analysis in Fink, the
policy underlying the absolute privilege, and other relevant caselaw, we
conclude that assessing the significant interest of the recipient requires
review of the recipient's legal relationship to the litigation, not their
interest as an observer. See id. at 436, 49 P.3d at 645-46; cf. Hall v.
Smith, 152 P.3d 1192, 1197 (Ariz. Ct. App. 2007) (stating that resolution
of the judicial privilege issue pivots on relationship of recipient to the legal
proceedings).
A nonparty recipient must have a relevant interest in, or a
connection to, the outcome of the proceeding See, e.g., Kanengiser v.
Kanengiser, 590 A.2d 1223, 1237 (N.J. Super. Ct. Law Div. 1991)
(establishing that trustees and beneficiaries of a trust had a significant
interest in potential litigation regarding the trust); DeVivo v. Ascher, 550
A.2d 163, 168 (N.J. Super. Ct. App. Div. 1988) (indicating that nonparty
recipient was significantly interested because the records sought in the
litigation were relevant to the amount owed to the recipient and the
recipient "could properly have been joined as a party"); cf. Theiss v.
Scherer, 396 F.2d 646, 648 (6th Cir. 1968) (noting that letter written by
attorney was absolutely privileged because it was addressed to an
attorney who represented a party with a financial interest in the
proceeding, and copies were sent to individuals with direct financial
interests in proceeding). Moreover, the nature of the recipient's interest in
or connection to the litigation is a "case-specific, fact-intensive inquiry"
that must focus on and balance the underlying principles of the privilege.
Hall, 152 P.3d at 1199.
Looking then at the relationship between the Wall Street
Journal and the underlying district court proceedings in this case, we
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conclude that the newspaper does not have a direct interest in, or
connection to, the outcome of the proceedings, other than as a spectator.
See Fink, 118 Nev. at 436, 49 P.3d at 646; Green Acres Trust, 688 P.2d at
623; Hall, 152 P.3d at 1197. As explained by the Arizona Supreme Court
in Green Acres Trust v. London, generally, "reporterisl play{ I no role in
the actual litigation other than that of a concerned observer." 688 P.2d
617, 623 (Ariz. 1984). Accordingly, we conclude that the Wall Street
Journal does not have any legal or financial interest in the underlying
litigation, and thus, it is not significantly interested in the litigation for
purposes of the absolute privilege. Essentially, because Adelson's
statements were published to a disinterested party, they are not
sufficiently connected to the judicial proceedings to warrant application of
the absolute privilege.
The conditional privilege of reply
Adelson also argues that this court should affirm the district
court's decision because he had a privileged right to reply to the
defamatory allegations made by Jacobs. Adelson contends that his
statements were directly responsive, proportionate, and relevant to
Jacobs' defamatory statements made against him in the complaint.
Jacobs responds by arguing that questions of qualified privilege cannot be
determined at this point, as this affirmative defense turns on facts and a
record that has not yet been developed.
The common law conditional privilege of reply "grants those
who are attacked with defamatory statements a limited right to reply."
State v. Eighth Judicial Dist. Court (Anzalone), 118 Nev. 140, 149, 42 P.3d
233, 239 (2002). To illustrate the conditional privilege of reply, this court
has previously explained that "[iljf I am attacked in a newspaper, I may
write to that paper to rebut the charges, and I may at the same time retort
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upon my assailant, when such retort is a necessary part of my defense, or
fairly arises out of the charges he has made against me.' Id. at 149, 42
P.3d at 239 (quoting Foretich v. Capital Cities I ABC, Inc., 37 F.3d 1541,
1559 (4th Cir. 1994)). This privilege is not absolute, however. It may be
lost "if the reply: (1) includes substantial defamatory matter that is
irrelevant or non-responsive to the initial statement; (2) includes
substantial defamatory material that is disproportionate to the initial
statement; (3) is excessively publicized; or (4) is made with malice in the
sense of actual spite or ill will." Anzalone, 118 Nev. at 149-50, 42 P.3d at
239.
The conditional privilege's application is generally a question
of law for the court. Anzalone, 118 Nev. at 149, 42 P.3d at 239 (citing
Lubin v. Kunin, 117 Nev. 107, 115, 17 P.3d 422, 428 (2001)). Although
Adelson argued that the conditional privilege of reply applied to his
statement, the district court specifically declined to consider these
arguments. The factual record has not yet been developed, and we decline
to address the applicability of the conditional privilege for the first time on
appea1. 4 See Lubin, 117 Nev. at 115, 17 P.3d at 428 (declining to
4Adelson also claims that his statements areS not actionable because
only factual assertions, not mere opinions, may sustain a defamation
claim. 'While Adelson raised this issue in the district court, the district
court resolved the motion to dismiss solely based on absolute privilege.
Because this is an assessment for the fact-finder, we decline to address it
here. Adelson may raise this issue on remand to the district court. See
State v. Eighth Judicial Dist. Court (Anzalone), 118 Nev. 140, 150-51, 42
P.3d 233, 240 (2002); Wynn v. Smith, 117 Nev. 6, 18, 16 P.3d 424, 431
(2001).
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determine whether a conditional privilege applied because, at the motion
to dismiss stage, the defendants had not yet "alleged the privilege by
answer, let alone established facts to show that the privilege applies").
For the foregoing reasons, we vacate the district court's
dismissal order, and we remand this case to the district court for further
proceedings consistent with this opinion.
S
Hardesty
et..t du; , J.
We concur:
J.
Douglas
J.
Saitta
D.J.
Montero
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CHERRY, J., with whom GIBBONS, C.J., and PARRAGUIRRE, J., agree,
dissenting:
I would affirm the district court's decision to apply the
absolute privilege to Adelson's statement and would conclude that the
privilege extends to statements made to the media. See Prokop v. Cannon,
583 N.W.2d 51, 58 (Neb. Ct. App. 1998).
As the majority acknowledges, the absolute privilege was
created to protect certain types of communications "because 'the public
interest in having people speak freely outweighs the risk that individuals
will occasionally abuse the privilege by making false and malicious
statements." Cucinotta v. Deloitte & Touche, L.L.P., 129 Nev. ,
302 P.3d 1099, 1101 (2013) (quoting Circus Circus Hotels, Inc. v.
Witherspoon, 99 Nev. 56, 61, 657 P.2d 101, 104 (1983)). To effectuate the
underlying policy behind the absolute privilege, it must be applied to
statements made to the media during the judicial process.
The now-pervasive media coverage of judicial proceedings has
resulted in the media and the public becoming significantly interested in
the proceedings See Fink v. Oshins, 118 Nev. 428, 436, 49 P.3d 640, 645-
46 (2002) (requiring that the recipient of the communication be either
directly involved or significantly interested in the proceeding) In this era
of the unrelenting 24-hour news cycle, the public interest would be served
by hearing both sides of a legal dispute. When the media is covering a
case, replies to allegations should be allowed as a right and should not
subject the declarant to having to prove that he or she was acting in self-
defense. People are often judged not on the outcome of their case, but on
the media's portrayal of them during the proceedings To tie their hands
would unduly subject parties to restrictions on their personal and/or
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professional need for freedom of speech at a time when the world is
watching.
Through the media's access to the judicial process, Jacobs was
allowed to tell his side of the story with impunity. To say that Adelson
must wait to respond through a legal channel is absurd. There is no
reason to constrain Adelson's response to future legal briefs and motions.
It makes no difference if Adelson's statements were made in his legal
briefs or directly to the media—the result is the same, widespread
dissemination to the public. Adelson should not be subject to defamation
claims in this instance merely based on the platform that he used.
As recognized in the election context, "it is our law and our
tradition that more speech, not less, is the governing rule." Citizens
United v. Fed. Election Comm'n, 558 U.S. 310, 361 (2010). Because of this,
I would decline to limit the scope of the absolute privilege rule in Nevada.
The natural avenue of response to the allegations covered in media is
likewise through the media. Accordingly, I would conclude that Adelson's
statement is absolutely privileged because it was made during the course
of this judicial proceeding and directly relates to the subject of this
lawsuit.
Pariaguirre
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